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The Role of the Private Sector in Canadian Healthcare: Accountability, Strategic Alliances, and Governance WHITE PAPER - WORKING DRAFT
A. Scott CarsonThe Monieson Centre for Business Research in Healthcare, Queen’s School of Business
Canadian healthcare is very expensive compared to other developed countries.
In 2014, total healthcare expenditures were forecast to be $214.9 billion, which
is 10.9 percent of GDP, making it the seventh highest among OECD countries
(CIHI 2014). In terms of per capita expenditures, based on 2011 data, Canada has
the sixth costliest system, 36 percent higher than the OECD average (OECD 2013).
Yet, system-wide, Canada’s performance compared to OECD countries is relatively
mediocre across a wide range of quality measures (CIHI 2014). Indeed, in a recent
Commonwealth Fund comparative study of eleven developed countries (2014),
Canada ranked second-to-last overall in measures of quality, access, effectiveness,
efficiency, and healthiness, ahead only of the United States.
Despite the mismatch between cost and performance, Canadians generally
approve of their healthcare system. Canadians favour their system because
they believe it is “public,” by which is meant that it is universal and has a single
government insurance payer. What many do not realize is that 30 percent of
the system’s expenditures are private, not public. Still, approval is very high.
Says Nanos: “There are very few, if any, pillars of Canadian public policy of which
Canadians approve as strongly as the principle of universal health care, which has
been with us since it was first adopted by the Pearson government in the 1960s”
(2009). This view is sustained in a poll commissioned by the Globe & Mail in 2012,
in which 94 percent of respondents called our universal system “an important
source of collective pride.”
What lies behind the desire for universality is social justice. The social principles
upon which Canadian healthcare is based are grounded in a sense of fairness.
These are the principles that are reflected in the Canada Health Act, which
declares the primary objective of Canadian healthcare policy to be “to protect,
promote and restore the physical and mental well-being of residents of Canada
and facilitate reasonable access to health services without financial or other
barriers” (Sec. 3). This has been likewise articulated in various national healthcare
reviews. For example, in his 2002 report, Building on Values: The Future of Health
Care in Canada, Romanow says, “Canadians have been clear that they still
strongly support the core values on which our health care system is premised –
equity, fairness and solidarity” (xvi).
In other words, what Canadians want is a healthcare system that meets certain
crucial tests of social justice. The first criterion is financial security for patients
and families. Universal government-funded and administered health insurance
is seen to protect against financially ruinous hospital and physician costs, which
are presumed to be a potential consequence of a private healthcare system.
Second, universally available and government insured healthcare benefits need
to meet the tests of both “fairness” in the form of universal “access” and “equity”
in the availability to everyone of the same level of services. Both access and
equity would allegedly be at risk in a private system in which the service model
is connected with private profit. A third consideration is “democratic control”
in order to meet the responsibility for policy formation and accountability
for outputs. Healthcare is seen to be a fundamental good and as such should
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Funded with generous support from the Joseph S. Stauffer Foundation.
The Role of the Private Sector in Canadian Healthcare: Accountability, Strategic Alliances, and Governance
be controlled, not by corporations and market forces, but by democratically
elected governments.
What does this mean for the role of business in Canadian healthcare? Many
proponents of a public system fear that if business plays a significant role in the
system of healthcare this will be tantamount to a private sector intrusion into
the delivery of a Canadian public good. It would be, as Canadians often say, “like
the American system.” As such, many people think it would stand in opposition
to the principles of social justice.
In this white paper, I will argue that there is much room in Canadian healthcare
for the private sector that does not impede the goals of social justice or fairness,
namely access and equity. In fact, the reverse is likely true: the involvement
of the private sector in the right places in the system can promote access
and equity by adding financing, resource capacity, expertise, innovation,
institutional learning, and reputation enhancement.
The focus of the discussion will be mainly on the third consideration above, i.e.,
democratic control of the healthcare system. I want to show that democratic
policy making and system oversight are compatible with various forms of
partnerships between the public and private sectors. The focus on the issue
of system oversight and management is important because considerations
one and two above, namely of personal financial security and system fairness
(i.e., access and equity), fall within the purview of governments. So long as
governments are not abdicating these responsibilities or ceding control of the
healthcare system, they are not prevented by the private sector from living up to
their responsibility to pursue the objectives of social justice. Instead, the private
sector can be a valuable partner in meeting them.
In what follows, I will consider, first, the role that the private sector plays in
Canadian healthcare today. Second, different forms of partnership that are
applicable to healthcare will be outlined, and I will explain how they can relate
to each other. Third, I will propose a collaborative governance model that could
provide oversight of public private partnerships that respects and promotes
the democratic obligations of governments to exercise oversight in the
healthcare system. Fourth, a case will be made for considering strategic alliances
as a key form of partnership between the public and private sectors.
THE ROLE OF THE PRIVATE SECTOR IN CANADIAN HEALTHCARE TODAY
Whether making a case to support or to oppose participation by the private
sector in Canadian healthcare, it is important to understand what is meant by
the attribution of “private,” because in healthcare discussions there is ambiguity,
both in the meaning of the word, and the circumstances in which it is used. First,
consider how the Canadian system is funded. Public funding means coming
from a government. For example, insurance coverage for payments to hospitals
and physicians is provided by provincial/territorial governments, which in turn
fund these payments from general tax revenues and (indirectly) from federal
transfer payments. However, when we say that funding is private, such as
payments made for prescription drugs, this can mean either funding by private
sector corporations who provide insurance, or from the pockets of individuals.
Opponents of private sector involvement in healthcare are more likely to be
targeting corporations than private individuals, yet both are picked up by the
word private.
Second, reference to the private sector can also be taken to be synonymous
with “business,” but there is also some ambiguity in this. Opponents of business
participation in healthcare may be thinking of large corporations, such as
multinational pharmaceutical or medical device manufacturers, but not a
family-owned neighbourhood pharmacy or a biotech start-up. Both, however,
are businesses – and businesses are part of the private sector, but different
from individual patients and families who are also private payers for portions of
their healthcare.
Third, when private is taken to be a proxy for business, the business being
referred to may not pertain to funding but rather to a “business perspective.”
For instance, business schools teach undergraduate and MBA students the
concepts, core principles, subject knowledge, and skills that not only generate
competence in dealing with business problems but also a way of looking at
problems – from a business perspective. Equally, someone who works in a
business, whether in a multinational corporation, start-up venture, or small
owner-operator company, is likely to develop a business perspective. This too
can be what is meant by private, or by private sector.
Fourth, private sector can refer to “practices” that are commonly associated with
what is found in businesses and what business schools research and teach. For
example, the boards of directors of many of the large hospitals are structured
and function in ways that are based on the theory and practice of corporate
governance. Hospitals and other healthcare organizations have widely
adopted, or adapted, these practices. Similarly, strategy processes such as the
“balanced scorecard approach,” which originated in business, are often used in
hospitals and other healthcare institutions. Much the same can be said about
financial systems, control and reporting, human resource theory, value creation
processes such as the “lean” principles and techniques, and so on.
Taking all of this into account, when we talk about the private sector
participating in healthcare, we have many possible ways in which that can occur.
In the next section, I will be more specific about how much “participation” is in
evidence in Canadian healthcare.
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The Role of the Private Sector in Canadian Healthcare: Accountability, Strategic Alliances, and Governance
Funding of Healthcare
Think of private participation in healthcare in relation to how the healthcare
system is funded. As indicated above, public sector expenditures are goods
and services for which a government pays. As well as the operating costs of
hospitals and patient visits to physicians, this includes the cost of government
health ministries and the funding of capital expenditures in hospitals, clinics,
and entities in the other parts of the system. The private sector financing applies
mainly to expenditures attributable to private insurance companies and out-of-
pocket payments by patients.
Government Funding
A public/private split exists in most countries. Using 2011 data, Table 1 shows
the relationship between public and private spending across OECD member
countries. Mexico, Chile, and the United States have larger private sector
funding percentages than the remainder of the 34 countries. Canada’s private
sector participation is the 12th highest, slightly higher than the OECD average,
and higher as well than 22 other countries.
0102030405060708090
100
OtherPrivate insurance Out-of-pocketPrivate sectorGeneral government
ChileUnited StatesMexicoKoreaIsraelSwitzerlandGreece ²PortugalSlovak RepublicAustraliaHungaryCanadaOECDPolandTurkey ²SloveniaSpainFinlandIrelandBelgium ¹EstoniaGermanyAustria ²ItalyFranceNew ZealandJapanSwedenIcelandCzech RepublicLuxembourgNorwayUnited KingdomDenmark ¹Netherlands ¹
Chile
United Kingdom
Norway
Luxembourg
Czech Republic
Iceland
SwedenJa
pan
New Zealand
FranceIta
ly
Austria ²
Germany
Estonia
Belgium ¹
Ireland
FinlandSpain
Slovenia
Turkey ²
Poland
Canada
Hungary
Australia
Slovak Republic
Portugal
Greece ²
Switzerla
ndIsr
ael
Korea
Mexico
United State
sOECD
Netherla
nds ¹
Denmark ¹
% of total expenditure on health
1. Current expenditure.2. No breakdown of private �nancing available for latest year.Source: Adapted from OECD Health Data 2011 StatLink http://dx.doi.org/10.1787/888932526274
85
65 14 15
214 17 17 160
20
0
20
5
20
5 5 54
12
11
1327
12
15
13
18 26 27
9
30 3248 33
12
19
34
7
2840
819
22 1
201
22
3
2428221313
13
95
7101
123
84 84 84 84 84 82 81 81 80 78 78 78 7775 75 75 75 74 73 73 72 72 71 70 68 66 65 60 60 58 58
48 48 47
Table 1: Expenditures on health by type of financing, 2009 (or nearest year)
In absolute terms, Canada’s private sector expenditures are $60.3 billion
(CIHI 2014). By comparison with other developed countries, Canadian private
expenditures are sizable. For instance, they are greater than the total public
and private healthcare expenditures in both Sweden ($55.6 billion) and Austria
($49.3 billion) (using data from The World Bank 2014). So it is clear that the
private sector is currently playing a significant role in Canadian healthcare in
funding terms.
Apart from the relative size of the private sector, it is useful to consider the roles
that the private sector plays in healthcare delivery in other OECD countries.
Canadians often focus on the U.S. because of its size and proximity to Canada,
but our comparators should be more broadly based. In the UK, for instance,
specialists can practice simultaneously in both state funded and private clinics.
The Swedish system is comprised of both public and private hospitals. And the
French system is a hybrid.
Healthcare Institutions
Hospitals are Canada’s primary institutional service providers. They account for
29.6 percent, or $63.5 billion, of all healthcare expenditures, of which about
$2.4 billion is paid by private insurance and out of pocket by households.
However, outside of the hospital, the private sector role has been growing either
to provide new services or take over some hospital functions. There is private
sector ownership of some specialized surgical hospitals (e.g., Shouldice
Hospital), and a growing number of private clinics provide diagnostic imaging,
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Funded with generous support from the Joseph S. Stauffer Foundation.
The Role of the Private Sector in Canadian Healthcare: Accountability, Strategic Alliances, and Governance
laser eye surgery, optometry, and so on. In other healthcare fields such as
dentistry, psychological counselling, chiropractic medicine, naturopathic
medicine, and pharmacy (external to the hospital), entities are owned and
operated variously by individuals, small practitioner groups, or corporations.
Ownership of pharmacies ranges from owner operators, to large corporations,
to food chains (e.g., Loblaws), to box stores (e.g., Walmart). Clearly, institutional
healthcare delivery is dominated in financial terms by public hospitals, but in
the scope of healthcare entities, the private sector is broadly represented and
likely increasing.
Product and Service Providers
Ranging from small entrepreneurial entities to large corporations, businesses
research, create, design, and manufacture medical technology, devices,
and pharmaceuticals. In addition, private sector contractors design, build,
finance, maintain, and operate hospitals (see Appendix A); businesses provide
services such as maintenance, janitorial, laundry, audit, legal, architectural,
and purchasing; and consultants and lawyers provide advice, on everything
from policy formation to risk management to organizational restructuring, to
government policy makers, regional health authorities and hospital boards,
and administrators.
Further, private clinics are increasingly providing diagnostic services such
as MRIs. Optometrists/opticians, chiropractors, psychological counsellors,
and other health service professionals provide services that lie outside of the
Canadian health insurance system. Even physicians, physiotherapists, and
pharmacists are for the most part in the private sector. For instance, of Canada’s
over 16,389 physiotherapists, 40.3 percent are in private professional practice
(CIHI 2010). Also, of the 38,737 thousand pharmacists in Canada, 73 percent
practice in the community or other non-hospital settings (National Association
of Pharmacy Regulatory Authorities 2015). Within the domains of health policy,
healthcare services, and healthcare institutional operations, the private sector is
well represented. And of course, by private sector, we mean professionals who
are practicing privately.
Business Perspectives
In hospitals, clinics, and community care centres, there is an important
difference between the “care” of patients and the “operating” aspects of the
entities. Consider the very considerable influence of business thinking that
exists in the operational side of hospitals and other healthcare institutions.
For instance, a hospital CEO’s executive team includes not only the chiefs of
medicine and nursing, but also the operational executive leads from finance,
risk, human resources, information technology and systems, and strategy
and communications. The subject knowledge of these operational areas
comes directly or is derived from business disciplines (i.e., finance, accounting,
organizational behaviour, MIS, and strategy). As well, the management
processes employed in the hospital, such as strategic planning, balanced
scorecards, lean processes, and so on, have their origins in business thinking
and practice.
In addition, the executives, and many of their staff members, are often
graduates of business schools or executive training programs, and many have
private sector work experience. For example, both the vice president of finance
and their reporting line staff may be graduates of commerce or business
administration programs who have articled with a public accounting firm while
completing the CPA designation. Those persons may have worked in the private
industry before later moving into the healthcare sector. Similar cases would
be found in MIS and human resources. Indeed, business schools anticipate
the need for business-trained hospital and other healthcare leaders. To this
end, there are MBA programs at Queen’s University, the University of Toronto,
York University, McGill University, Western University, and the University of
British Columbia that have healthcare management specializations to prepare
graduates for such positions.
Business perspectives are in evidence even beyond management. Boards of
directors of hospitals (especially in Ontario’s 151 hospitals) comprise both
internal hospital members (ex officio and appointed) and external elected
members. A significant number of the elected members are employed in the
private sector, e.g., banks, consulting firms, manufacturing companies, and
technology firms, and bring a business perspective to the governance of
institutions. Table 2 shows the results of an analysis of external directors’
business and academic/professional backgrounds in 17 of Ontario’s academic
hospitals. From a total of 256 external directors, 70 percent have business
experience and 75 percent have either business experience or a business
degree/professional designation. In 9 of the 17 hospitals, 80 percent or more of
the directors have either business experience or a business degree/professional
designation. Clearly, business thinking plays a significant role in hospital
governance.
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The Role of the Private Sector in Canadian Healthcare: Accountability, Strategic Alliances, and Governance
Selected Academic
Hospitals in Ontario
(Hospitals with publicly available
director bios)Elected
DirectorsEx-Officio/ Appt.
Directors Total Directors
Elected with Business
Experience (%)
Elected with Business Degree/
Professional Designation
(%)
Elected with Combined Business
Experience and Business Degree/Prof. Designation
Elected with Business
Experience or Business
Degree/Prof. Designation
Hospital 1 17 6 23 15 (88) 8 (47) 7 (41) 15 (88)
Hospital 2 17 4 21 12 (71) 7 (41) 6 (35) 13 (76)
Hospital 3 16 6 22 8 (50) 5 (31) 4 (25) 9 (56)
Hospital 4 16 4 20 10 (63) 3 (19) 3 (19) 10 (63)
Hospital 5 12 5 17 8 (67) 5 (42) 4 (33) 9 (75)
Hospital 6 15 4 19 9 (60) 7 (47) 7 (47) 9 (60)
Hospital 7 18 6 24 17 (94) 9 (50) 9 (50) 17 (94)
Hospital 8 13 4 17 10 (77) 8 (62) 8 (62) 10 (83)
Hospital 9 11 6 17 3 (27) 4 (36) 3 (27) 4 (36)
Hospital 10 26 6 32 23 (88) 9 (35) 9 (35) 23 (88)
Hospital 11 12 5 17 9 (75) 4 (33) 5 (42) 10 (83)
Hospital 12 15 5 20 6 (40) 3 (20) 2 (13) 7 (47)
Hospital 13 15 3 18 9 (60) 7 (47) 4 (27) 12 (80)
Hospital 14 15 7 22 8 (53) 5 (33) 5 (33) 8 (53)
Hospital 15 7 11 18 7(100) 2 (29) 2 (29) 7 (100)
Hospital 16 15 8 23 13 (87) 5 (33) 5 (33) 13 (87)
Hospital 17 16 9 25 13 (81) 9 (56) 8 (50) 15 (94)
TOTALS 256 99 355 180 (70) 100 (39) 91 (36) 191 (75)
Table 2: Business Experience and Education of Elected Directors in Selected Ontario Academic Hospital
In addition, the board’s processes, committee structures, self-assessment, and
reporting frameworks are derived from private sector theory and practice.
Equally, the governance of regional health structures like the Local Health
Integration Networks (LHINs) in Ontario, as well as their fundraising foundations,
share these private sector characteristics. So private sector thinking, processes,
and experience pervade healthcare institutions.
It should be noted that there is controversy in the field of management
education regarding the extent to which the emphasis in business schools on
profit and competitive advantage develops in students a worldview based on
self-interest and lack of appreciation for broader social goals. This may overstate
the importance that students attach to finance and strategy courses, and give
insufficient recognition to the perceived value of course work in organizational
behaviour and corporate social responsibility. But certainly a corporate and
commercial way of thinking does affect students, which does reasonably lead to
the conclusion that business graduates are in general financially oriented,
results focused, and taught to think in terms of rational decision-making
frameworks. It is in this way that leaders in healthcare institutions come to adopt
a business perspective.
This perspective should not be confused, however, with excessive attention to
financial matters at the expense of patient health and safety. To do so would
fly in the face of the principle of patient-centredness. Indeed, the restructuring
of the NHS England in 2013 was strongly influenced by the results of a national
investigative commission that linked unnecessary deaths and very poor patient
safety in many hospitals to the over-concern of management and boards with
budgetary matters at the expense of patients (Francis 2010).
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Funded with generous support from the Joseph S. Stauffer Foundation.
The Role of the Private Sector in Canadian Healthcare: Accountability, Strategic Alliances, and Governance
While the patient care and operational aspects of healthcare institutions are
“different,” they are not “separate” from one another. Executives and their
departments work together as a team in the enterprise of delivering healthcare
to patients, families, and communities. Modern healthcare therefore blurs the
dividing lines between public and private to deliver institutional healthcare.
Business Practices
Healthcare institutions today are strategic planners. The demands of
accountability to governments, agencies, and the public require hospitals and
other institutions to plan strategically. They must consider: (a) how they will
function strategically in relation to the health system (e.g., LHIN) of which they
are a part; (b) how they will be able to partner with community health and social
services; (c) how to strategically focus and prioritize their medical services;
(d) how to assess financial needs and sources of funding for operational and
capital expenditures; (e) how to plan, prioritize, and fund research and teaching
(for medical centres); (f) how to allocate health human resources; and address
primary care (g) how to establish plans for information and management
technology; and (h) how to establish management processes, such as lean
operations.
In each of these categories of practice, the theories, core concepts, processes,
and practices are derived at least in part from management theory, research,
and practice. Of course the implementation is adapted to healthcare, but the
conceptual origins are traceable to business.
At the provincial/territorial level, a similar connection to management can be
seen. Of course, healthcare policy development is more traditionally the role of
governments even if institutional application is business based. But even policy
is influenced by business thinking when advisory commissions, councils, and
consultations include private sector participants.
To conclude, private sector participation in Canadian healthcare can be thought
of in terms of how the system and its components are funded, the infusion of
business perspectives into the governance, management, and operations of
the healthcare system, and the practices of managing and operating healthcare
institutions that are derived or adapted from business. Looking at the delivery
of Canadian healthcare today, it is not realistic to question whether business
should be present in our “public” system. The question should be, where is the
participation of business most likely to contribute to achieving the ideals and
strategic objectives of our system?
In order to answer this, we need to understand the ways in which business and
government are related to each other in Canadian healthcare. If the healthcare
system requires democratic oversight in order to be in accord with social
principles such as fairness, access, and equity, then we must understand why
business should participate and how business and government relate to each
other in ways that make this oversight possible.
Why Should the Private Sector Participate?
The benefits of private sector participation in healthcare should be assessed
primarily on the basis of how well it promotes the interests of patients and
their families. The overriding commitment should not be to the self-interests
of professionals, organizational convenience of providers, pragmatic interests
of politicians, or theoretical commitments of ideologues. It was said above
that Canadians want healthcare to be guided by the principles of social justice,
namely fairness to patients and families in the form of access and equity. So the
justification for private sector participation should be assessed on the basis of
its contribution to the efficient and effective performance of the system that
generates healthcare outcomes to meet the social principles.
While this will be addressed more fully below, it is useful to introduce the key
points here. Figure 1 summarizes a “framework” that shows what a collaborative
relationship can yield in terms of benefits. The framework sets out two
categories of contribution – resources and growth. Within those categories are
six types of benefit. Working together toward the potential beneficial outcomes
for the healthcare system are efficiency and effectiveness. In turn, these
contribute to improved access and equity for patients.
RESOURCES
EFFICIENCY
EFFECTIVENESS
ACCESS
EQUITY
FinancingCapacityExpertise
InnovationLearningReputation
GROWTH
Figure 1: Public and Private Sector Collaboration Framework
The framework categorizes the benefits of public and private entities working
together, first, in terms of the resource contributions that derive from private
sector strengths, and second, in the growth opportunities for the entity that
constitute the relationship between the public and private sector. In more
detail, the benefits are as follows.
The first is “financing.” The private sector partner may have access to financing
for certain projects. If so, this not only adds financial resources to the project,
but also it transfers financial risk from the government to the private sector
partner. Collateral benefits to the government are both freeing up finances for
spending on other programs and removing the need for borrowing. The latter is
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The Role of the Private Sector in Canadian Healthcare: Accountability, Strategic Alliances, and Governance
important because adding debt to government balance sheets can affect bond
ratings, which in turn can have a negative impact on future borrowing costs.
Second is “capacity.” Projects and other joint undertakings have non-financial
resource requirements: human resources, technology, plant and equipment,
business processes, and so on. Even limitations on time availability can be a
capacity constraint. In some cases, a public sector partner may not possess the
needed resources; even if they do have the resources, the government may
need to deploy them elsewhere. Partnering with the private sector can offer a
solution to capacity problems.
“Expertise” is the third enabler that a private partner may be able to contribute.
This could be in the form of unique experience in executing tasks required
for the project to be successful. Or it could involve proprietary technologies
or business processes, which are valuable to the project, rare in terms of
availability, and difficult to imitate, or for which there are few viable substitutes.
Fourth is “innovation.” Invention and discovery of feasible solutions to problems
through new products and services is a strength of the private sector, especially
when capacity is combined with expertise. To say that private and public
sector entities working together will necessarily innovate is an overstatement.
Innovation occurs when the conditions are favourable. However, the potential
for innovation should be a consideration when evaluating private sector
participation if, based on the best available evidence, innovation has a better
chance of occurring if the public and private sectors work together than if they
do not.
Fifth is “institutional learning.” In the process of working together, public and
private sector individuals and institutions can learn much from each other.
There is the human dimension of working together in which an individual learns
the perspectives of the other as they develop a working rapport. Much was
said about the business perspective above; for those whose careers have been
in the public sector, the business orientation takes getting used to, and vice
versa. In addition, new business processes can be learned – from the balanced
scorecard approach to translating strategic objectives into measurable goals
with targets, lean value enhancement processes, and so on. Finally, innovations
and discoveries can be leveraged, extended, and transferred to other aspects of
each partner’s business (subject to contractual agreements).
Sixth, “reputational enhancement” is important to the ongoing work of both the
public and private partners. For example, a research institute that, because of a
private public alliance, has state of the art facilities and technology, combined
with a reputation for leading edge research, makes recruitment of new high
quality researchers much easier. As well, it improves the chances of success in
applications for additional grants and other forms of research funding.
With these points in mind, we turn now to consider what forms participation
between the private sector and public sector can take.
RELATIONSHIP BETWEEN PUBLIC AND PRIVATE SECTORS
In this section, I first explore three ways in which the public sector, mainly
governments, can relate to the private sector: regulation, ownership/control,
and partnerships. Second, I will set out a framework for assessing which forms of
relationship are most suited to addressing healthcare issues.
Regulation
Public policy in healthcare is in the purview of governments. The
implementation of policy is often delivered or implemented by sub-levels of
government or the private sector. In either case, in advancing a policy aim,
a government provides a regulatory framework within which the policies
must be implemented. For instance, the Canadian government oversees the
implementation of the Canada Health Act, and in doing so acts as a regulator
for other governments (provincial and territorial) in terms of universal health
insurance, and for private sector corporations with respect to pharmaceutical
approvals. In turn, provinces and territories regulate medical device approvals.
Regulatory frameworks in healthcare function in much the same way as they
do in other areas of public policy. They ensure oversight while recognizing that
other entities are better positioned to deliver products and services.
Ownership and Control
Canadians are very familiar with crown corporations such as the Export
Development Corporation and Canada Post Corporation. These are not-for-
profit corporations, the shares of which are owned by the government, that
compete with private sector counterparts. Agencies such as provincial securities
commissions, gaming and lottery, and alcohol sales may have different legal
structures (depending on the jurisdiction) in not having shares that are owned
by the government.
A government may prefer to own rather than regulate in order to implement its
policies directly. Sometimes governments change their minds about ownership
and divest their corporations. The government of Canada divested itself of both
Air Canada and Canadian National Railway. Similarly, the Ontario government
announced recently that it intends to sell part of its ownership of Hydro One, its
electricity transmission system. Alternatively, governments sometimes transfer
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Funded with generous support from the Joseph S. Stauffer Foundation.
The Role of the Private Sector in Canadian Healthcare: Accountability, Strategic Alliances, and Governance
control of entities by means of long-term leases. The Canadian government
did this in the 1990s when it leased major airports in Canadian cities to regional
airport authorities.
Since governments still retain a public policy interest in many of their divested
entities, they can continue their oversight by way of regulation as above. For
example, the Ontario government constructed a toll highway (Hwy 407) as a
means of achieving a public policy objective, namely relieving traffic congestion
on another major highway (Hwy 401) in close proximity. Ontario subsequently
sold the toll highway in 1999. Part of the sale involved a regulatory mechanism
that tied future toll price increases to mandatory traffic volume targets. There
were stiff financial penalties if the higher tolls resulted in reductions in the
volume of traffic below a required threshold. As long as the toll road carried
the required volume of traffic, it was deemed to be meeting the public policy
objective of relieving traffic congestion on the other major highway. The
regulatory structure was the government’s tool for achieving this.
Regulation is an indirect way for governments to engage with the private
sector. Except in cases where regulation is directly tied to a single company, the
connection is usually impersonal because it is at an industry level. Ownership by
contrast is more direct. But even here, the extent of direct involvement between
owner and owned depends on the particular situation. A government can be
more or less involved in the oversight and management of the entity it owns.
Assessing whether either regulation or ownership is a desirable form of
relationship in promoting public policy or programs by using the private sector
requires us to think of the particular situation under consideration in relation to
the four tests above: finance, capacity, expertise, and innovation.
Let us compare regulation and ownership with another important form of
business and government relationship, namely partnerships.
Types of Partnership
Contracting Out
At one end of the spectrum of partnerships is “contracting out” for goods
and services. Governments enter into contracts with businesses to have them
perform custodial and cleaning services in government buildings, highway
snow removal, road construction, facilities maintenance, supply chain
management for procurement, and so on. Hospitals contract out for laboratory
services, linens, parking, legal and audit, and other services. The rationale for
contracting out is often a matter of cost and expertise: it is less expensive to
purchase the service, the service requires competency that does not exist in-
house, there is insufficient capacity within the existing in-house resources, or
the service required is not a core activity of the organization.
Characteristic of this form of partnership is that the relationship is: (a)
established by the government partner; (b) contractually bound; (c)
performance-based; (d) limited in scope by the terms of the contract; and (e)
time limited. In sum, governments pay for a service to be performed. Once the
service has met the completion test established by the contract, the relationship
ends, at least until it is renewed or reconstituted by a further contract.
Public Private Partnership
A partnership is created when two or more parties undertake some form of
project or activity toward which each makes a contribution to establish the
partnership and continue its operation. Contributions can be financial, real
property, plant and equipment, expertise, or indeed anything of value that
contributes to the venture. Often one partner takes the lead in managing the
partnership. A partnership is not a defined legal entity such as a corporation;
rather it gains legal status by virtue of legal agreements that the partners enter
into between themselves. For example, lawyers and accountants establish
partnerships to practice law or accounting together by sharing premises,
administration, and business development expenses. Also, mining companies,
even competitors, sometimes create a partnership to develop a mine where
the cost would otherwise be prohibitive for either partner on its own; rival
technology companies will also establish a jointly owned company to develop a
new technology or application.
Another common form of partnership of importance to the healthcare
discussion is a “public private partnership” (“P3”). This is a joint venture among
partners, which, as the name implies, involves a government, either directly
through a ministry, agency, or controlled entity, and at least one private sector
partner. Each contributes to the establishment of the partnership.
A P3 shares certain features with contracting out, namely that the relationship is
government established and led, it is contractual in nature, and it typically has
a finite life that is usually coincident with the completion of a project for which
the partnership has been formed. What makes it different from contracting out
is that the undertaking in which the partners are venturing together is more
complex than a simple contract – in some cases because multiple contracts are
combined to achieve different but connected objectives.
In Canadian healthcare, a common form of P3s can be observed in hospital
infrastructure projects. In a new or redeveloped hospital project, the
government (or ministry) engages a partner, or partners, to design, finance,
build, operate, or maintain a hospital. The partnership often involves a
combination of some or all of these functions. See Appendix A for a chart
outlining some of the P3s used for Canadian healthcare projects.
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The rationale for P3s typically focuses on resources and expertise. The resource
implications for governments are twofold. The first is financial. In contracting
out, a government provides the funding to support the partner’s performance
of the contract. However, in a P3, the private sector partner often provides
the financing for the partnership. Indeed, in all 84 healthcare projects listed in
Appendix A, the private sector partner provides financing, in addition to design,
build and other functions. This relieves the government of either or both income
statement or balance sheet pressure, which is to say that the government is
thereby not required to use its own operating or capital funds for the project
and it does not need to add debt to its balance sheet through borrowing. The
second implication is that governments may not have the resource capacity
– e.g., workforce, equipment, technology – to take on a large construction or
other project. Since the private sector partners are in business to perform these
roles, it makes sense for their resources to be utilized by government.
Expertise is not always present within government, but it can be sourced from
the private sector. Project design, construction, and management are the
specific expertise of some companies, which can be leveraged by governments
through industry partnerships.
What is key for a government in the determination of the viability of a P3 is
to ascertain whether it, or potential private sector partner, has the greater
expertise in the evaluation of the risks and benefits of a given project, and who
is in the best position to manage those risks once identified. Matched with the
question of expertise is the matter of resource capability and capacity. Granted,
not all projects should be P3s. Each case needs to be evaluated on its own
merits. However, where there is a stronger argument for partnering based on
resource and expertise considerations, P3s should be seriously considered as
an option.
As a further note, we must keep in mind that it is in the nature of “partners”
in any undertaking to have aspirations, objectives, and motives that differ
from each other. A partnership must accommodate these differences in a way
that “corporations” do not. The latter can remove dissonances that inhibit
the corporate purpose. They can fire recalcitrant executives, refuse to accept
divisional strategies and plans that do not align with the corporate objectives,
and harmonize the corporate culture to promote conformity of purpose and
perspective. However, partnerships must accommodate differences. Successful
partnerships achieve this accommodation whereas unsuccessful partnerships
fail and dissolve.
In the realm of healthcare P3s, then, it is to be expected that the private sector
partners will have commercial objectives and the government partners will
want to achieve public policy ends. Successful P3s are those that accommodate
both because doing so allows each partner to achieve outcomes that promote
its own objectives, while together partners achieve outcomes that fulfill
collective goals. In sum, partners learn to work together, rather than one
subsuming the other.
Strategic Alliance
Strategic alliances are a form of joint venture partnership. Often the terminology
of joint venture and strategic alliance is used interchangeably. However,
strategic alliance as I use the term here refers to a partnership that is more open-
ended than a project. Alliance partners have a purpose in going beyond existing
projects (Carson 2015a). They come together in order to explore opportunities
for the future that are in pursuit of broader strategic goals (Doz and Hamel 1998).
The Canadian Partnership Against Cancer is an example of this. It is funded by
the federal government to promote cancer control by bringing together cancer
experts, charitable organizations, governments, cancer agencies, national
health organizations, patients, survivors, and other groups, to implement a
Canada-wide cancer control strategy. Its main functions span a continuum
encompassing prevention through healthy communities and lifestyle, cancer
screening, system performance and quality guidelines, treatment, and follow-
up and survivorship (Canadian Partnership Against Cancer 2015).
A project can be a part of such a relationship, but the purpose of the alliance is to
pursue business opportunities that go beyond a pre-defined project to include
ventures that explore new processes, technologies, or products that may not yet
have been identified. An illustration from the technology industry is an alliance
that formed in the 1960s between Fuji and Xerox to compete against Canon
and Ricoh in the paper copier market. That partnership later grew to include a
new partnership that formed between Xerox and Rank Organization and many
smaller companies. Collectively they were able to pursue new technological
innovations, even though they individually had their separate corporate
objectives (Gomez-Casseres 1996).
Some alliances are “pooling” in that they bring together organizations that have
similar resources, for example a purchasing alliance that involves a group of
hospitals and preferred device suppliers. A “trading” alliance brings together
organizations with different resources. An example is the alliance formed in 2011
between General Electric’s healthcare unit and M+W Group to produce
biopharmaceuticals such as vaccines, insulin, and biosimilars for emerging
nations. GE brought its technical expertise to the partnership, and M+W
contributed its global engineering, construction, and project management
(General Electric Company 2011). Indeed, the Premier healthcare alliance in
the U.S. includes 2,300 hundred hospitals and $33 billion in purchases (Zajac
et al. 2011).
Figure 2 compares in summary form the three main forms of partnership.
9
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The Role of the Private Sector in Canadian Healthcare: Accountability, Strategic Alliances, and Governance
GovernmentEntity
Initiates relationshipEstablishes contractProvides Financing
Private SectorContractor
SuppliesServicesProject
Contractor provides • Capacity• Expertise
GovernmentEntity
Initiates contractual relationships
Partner B
Partner APartner C
Partners provide• Financing (potential)• Capacity• Expertise
GovernmentEntity
Partner B Partner A
Partner DPartner C
Alliance partners provide• Financing• Capacity• Expertise• Innovation• Institutional learning• Reputational enhancement
Contracting Out Pubic Private Partnership (P3) Strategic Alliance
Figure 2: Partnership Form Comparison
The P3s model, which is common in healthcare, especially with respect to
infrastructure development, tends to have many of the features of a strategic
alliance. Yet the strategic alliance may hold a special promise for Canadian
healthcare because it brings partners together around shared strategic
priorities. Could governments in Canada feasibly pursue strategic alliances
in healthcare with business? The opportunities that could be explored are
considerable insofar as the private sector is able to contribute resources
and expertise to the alliance. The public sector contributions would include
public policy strategic objectives and alliance leadership. Let us consider this
more fully.
Public Private Strategic Alliances
There are two important questions to answer: In what parts of the healthcare
system would strategic alliances be most appropriate? How should strategic
alliances be structured in order to ensure that governments retain their public
policy and accountability roles and responsibilities?
There are many places where strategic alliances are appropriate in the
healthcare system. For example, in the U.S., General Electric, Siemens, and
Philips have developed strategic alliances with academic medical centres,
hospital systems, and physician groups. In a Canadian example, a group of
hospitals in south eastern Ontario have established a supply chain company
to purchase and deliver medical supplies to achieve cost synergies. Further, a
possibility exists for a cluster of hospitals to partner with a device manufacturer
or technology company to leverage resources and to explore new clinical
practice models. Finally, there are possibilities for strategic alliances in which
the private sector provides financing and management expertise to build
laboratories and the hospitals provide research programs and resources. None
of these are radical or untried, but they are not as well developed or far-reaching
as they could be.
In short, alliances can form between “suppliers” such as pharmaceutical
and biotech firms for drug development and commercialization, or medical
device and information technology firms for such things as remote monitors;
“suppliers and providers” as in the case of hospital researchers and medical
imaging firms; “clusters of providers” such as pharmacies and retail stores;
“buyers and providers” such as a manufacturing company establishing on-sight
clinics for employees; and “buyers and other buyers” such as a medical device
manufacturer, which, as an employer, forms an alliance with a health insurance
group (Zajac et al. 2011).
Alliances are not a panacea. Conditions many not conducive to success.
The macro environment – political, economic, technological, and social
conditions – needs to be supportive of the strategic objectives of the alliance.
And the strategic priorities of the partners need to align or success will be
difficult to achieve. Further, the alliance partners need to be able to establish a
management and governance structure that enables them to work together
collaboratively, i.e., that matches their specific behavioural characteristics.
Finally, the behavioural complexion of the alliance needs to be compatible
with working together. Some partners are better at working cooperatively
than others. Indeed, there is a gradation in the degree of cooperativeness: fully
cooperative to quasi-cooperative to indifferent to competitive to vengeful
(Zajac et al. 2011). At some stage, cooperativeness can fade to the point where
the alliance is untenable. Finding and maintaining a collaborative relationship
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The Role of the Private Sector in Canadian Healthcare: Accountability, Strategic Alliances, and Governance
is difficult but potentially valuable if it can be sustained. Still, even successful
alliances have limitations to their life.
Of course, conflicts of interest and other problems can arise in strategic alliances.
However, this does not provide an argument against alliances per se, but rather
points to areas where management of the relationship requires attention. As the
public and private sectors gain more knowledge of each other’s perspectives
through the infusion of business thinking in healthcare, and the expansion
of private sector service delivery across the continuum of care, the ability to
resolve issues and problems increases.
Strategic alliances are a powerful form of partnership, and they can help
to promote social justice objectives. This does not mean that all projects
and undertakings need to involve this or any other form of business and
government partnerships. Rather, it is certain specific undertakings that should
be considered, such as projects, strategic research and development, product
research and development, service delivery innovations, system integration
prototypes and experiments, and so on.
The challenge for a government in a strategic alliance relationship is that it is
a “partner” in a strategic venture rather than being in “control” as in a P3. Even
though a P3 does not always allow for the immediacy of control that exists
in the contracting out relationship, there are, nevertheless, levers of control.
These levers are less available in a strategic alliance – a partnership of equals.
The question then is, how does government build into the relationship a
control feature that allows it to exercise its democratic policy and accountability
oversight?
The answer, I suggest in what follows, is at the governance level. I propose a
bicameral governance structure in the context of a collaborative governance model.
BICAMERAL COLLABORATIVE GOVERNANCE
Collaborative governance is emerging as a powerful oversight model in
multi-stakeholder undertakings, which involve a government and two or more
non-government partners. The non-government partners may not include a
private sector partner, but for present purposes these collaborations of interest
will involve a private sector partner. In a collaborative governance entity the
partnership is initiated by the government partner. The government’s objective
is to create a multiparty entity that will implement a policy or program. While
the government is the originator of the collaborative entity, it may or may not
be active in its operations. The new Ontario Health Links are an example of
such an entity: the government seeks to achieve certain of its local healthcare
integration policies through entities that link multiple health providers, such
as hospitals, nursing homes, community social services, medical teams,
and so on. The governance of such a collaborative entity is a body that is
representative of the collaborators. Their relationship to each other may be
contractual, but is more likely determined by informal agreements in reference
to the government’s policies, mandate assignments, and regulations. Typically,
collaborative governance functions by discussion and consensus, rather than
legal authorities and performance deliverables (Ansell and Gish 2008).
The collaborative governance model has broader application than entities such
as Health Links. It could apply to strategic alliances that address major strategic
challenges such as health system transformation, in which the collaborators
could involve different private sector companies. If so, one of the weaknesses of
the collaborative governance model should be easy to see. With such a reliance
on discussion and consensus, collaborative governance is most compatible with
entities that are closely aligned in terms of overarching objectives, purpose, and
values. Corporations have commercial objectives such as growth, profitability,
and enhancement of shareholder value. This does not always align with patient-
centred and broader social goals. How then could a collaborative governance
model effectively address conflicts and contrasting objectives? The answer is
that in order for governments to be satisfied that they have a mechanism for
asserting some form of control over the entity, something must be added to the
governance model.
What is proposed is a bicameral governance structure, which contains a
dual oversight component (Carson 2015b). First is the board of directors of
the collaborative entity. Call this the Operating Board. The mandate of the
Operating Board is to provide oversight of the management and operations
of the collaborative. The role of management of the collaborative is to ensure
the operation of the collaborative and the achievement of its objectives. The
Operating Board oversees management to ensure that it is doing its job. To
ensure that clarity exists between the Operating Board and management, there
must be an “operating agreement.” The day-to-day functioning of management
within the terms of the agreement is the responsibility of the Operating Board.
In thinking of strategic alliances, the Operating Board would provide the control
feature of management oversight. The ongoing operations of the alliance would
be the responsibility of management. The Operating Board would provide
the same governance role as any corporate board exercises with respect to
management.
The second component of the bicameral structure is what we will call the
Policy Council. This is a board comprising the government and private sector
representatives, whose role is to ensure that the collaboration is continuing
to serve the policy purpose for which it was formed. The Policy Council is the
vehicle through which the government is able to ensure that its policy authority
and accountability requirements are met. It is not the role of the Policy Council
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The Role of the Private Sector in Canadian Healthcare: Accountability, Strategic Alliances, and Governance
to concern itself with day-to-day operations, or to intervene in the sphere of the
Operating Board’s responsibility.
The Canadian Blood Services provides an illustration of the bicameral structure.
As an operating entity the corporation and its management are overseen by a
board of directors. The board’s responsibility is to ensure that management is
acting in the best interests of the corporation in accordance with its mandate.
In our terminology this is the Operating Board. But the Canadian Blood Services
has a second component to its governance structure. The corporation’s
activities are funded by the provinces (except Quebec), so each province has
an interest in ensuring that its objectives are being met overall. The Canadian
Blood Services version of what we would call the Policy Council is the entity that
reviews the corporation from this overarching point of view. There is a council
that is comprised of government officials who review the broad functioning of
the corporation in relation to its purpose for being. This is not its operational
role. In this way the corporation’s bicameral governance structure provides two
types of oversight (Sher 2015).
It is important to distinguish between a “bicameral model” and what we might
call a “two-level model” in which one board provides oversight to the other.
The upper level board is thereby more senior than the lower level board. This is
different than in a bicameral structure where the boards have different purposes
and roles.
It must be recognized though that the Policy Council has a more senior level
standing than the Operating Board, for the Policy Council has the power to
end the relationship between the government and its alliance partners. But its
senior position does not imply a duty of oversight or a duplication of its role in
supervising the senior management of the organization.
Figure 3 summarizes the structural difference between a two-tier governance
model and a bicameral model.
Government
Board of Directors
Operating Board
ofDirectors
PolicyCouncil
Two-tier Governance Bicameral Governance
Management Management
ORGANIZATION COLLABORATIVEENTITY
Operating Agreem
ent
Figure 3: Two-tier and Bicameral Governance
STRATEGIC ALLIANCES IN CANADA
What is being proposed herein is a non-politicized approach to advancing
Canadian healthcare in spheres that can best benefit by organizations
and individuals from both public and private sectors working together
in collaboration. This is not the place to outline in detail where specific
opportunities might lie. However, the six-point framework outlined above (i.e.,
financial, capacity, expertise, innovation, institutional learning, and reputational
enhancement) is a useful evaluative tool, both for assessing the viability of an
alliance candidate and for seeking out and prioritizing new opportunities.
In these challenging times of resource constraint, many public sector healthcare
institutions focus on the first three components of the framework, namely
financial, capacity, and expertise, as a way of bolstering what might be absent or
in short supply. As an illustration, the Council of Academic Hospitals of Ontario
(CAHO) expresses a deep concern about funding for the research enterprise in its
2013–14 Annual Report. Referring to its own study of funding pressures it says:
These findings by the CAHO community provide the basis for an
informed discussion with investment partners in government,
industry and the philanthropic community. CAHO will continue to
work to develop a model for sustainable, long-term investment in
health research…
In this statement, CAHO is recognizing the importance of public private
collaboration, but the focus is placed on resource constraint. This is not a
criticism of CAHO because this was the purpose of their study. Still, it draws
attention to the importance of looking for strategic opportunities beyond the
financial aspects.
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The opportunities in Canadian healthcare are numerous and varied. Many
involve connecting entrepreneurs or corporations who have developed a new
technology with providers and patients. For instance, the Ontario Telemedicine
Network is a world leader in telemedicine that links technology, specialists,
primary care professionals, and patients. As an example of the available services,
a patient in a remote location can send a photograph of a mole on her arm to
a dermatologist who then responds with a diagnosis in days, rather than the
patient waiting weeks or months for an in-person consultation. Or, a patient
wearing a remote monitoring device can be monitored by a practitioner
who interprets the data for early intervention at the local level, rather than
in the emergency room of a hospital. Alliances such as these achieve not just
cost savings, capacity, and expertise, but also innovation, new learning, and
reputational enhancement.
Some alliances form because the partners conceive of an innovative solution to
a problem coming from an application of an existing technology. In other cases,
the alliance partners begin with a problem and together design an original
solution that itself can give rise to future applications. Both alliances bring value
that goes beyond other forms of partnership with respect to innovation. The
latter, though, has the potential to generate more learning and reputation than
the former. When thinking of the continuum of partnerships discussed above
in relation to Canadian healthcare, all are valuable, but the strategic alliance has
the most to offer.
As a summary of partnership structures, Table 3 sets out the considerations for
selecting the most appropriate form of partnership for the objectives to be met.
Forms Contracts Public Private Partnerships Strategic Alliances
Roles • Services: Maintenance, professional (accounting, audit, IT)
• Supplies: Hospital medical, technical, devices, equipment
Projects: Hospital, clinical, and other infrastructuredesign, build, finance, operate, maintain.Services:Pooling of resources to achieve shared objectives.
• Strategic system change processes• Research and development• Strategic technology transformation:
At either system or institutional levels: strategy, planning, management
Relationship • Government strategy, management• Government funded
• Government as policy and strategic lead• Private sector responsible for
management and execution of project• Funding government or private sector
• Government and private sector as co-leads
• Private sector responsible for management and execution of venture
• Funding government or private sector
Value Contributions
• Cost saving• Resource efficiency• Expertise availability
• Revenue generation/financing availability, risk reduction
• Cost saving• Capacity expansion• Expertise
• Revenue generation, cost saving, risk transfer
• Capacity expansion• Expertise• Innovation• Institutional learning• Reputation enhancement
Risk to Democratic Accountability
MinimalGovernment establishes contract details. Service and supply providers tender.
MediumGovernments are partners. Contracts often contain flexibility for private sector. Potential to extend outside government control.
HighGovernments are equal partners in the venture. Dispute mechanism and exit arrangements are essential for both parties.
Control Feature Legal contractual control Partnership influence, legal remedies, cancellation of partnership
BICAMERAL COLLABORATIVE GOVERNANCE
Table 3: Partnership Summary
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The Role of the Private Sector in Canadian Healthcare: Accountability, Strategic Alliances, and Governance
Choosing the most appropriate form of partnership should be based on a
clear understanding of the risks and benefits to be derived. Contracting out
for services or supplies is a government-driven relationship that can result in
cost savings, capacity enhancement, expertise availability, and reduction of
risk by transferring it to a contractor. Alternatively, P3s enable government-led
partnerships to provide opportunities of revenue generation or alternative
financing availability, resource capacity expansion, expertise availability
for each of the partners, and risk reduction or sharing. Further, the strategic
alliance provides virtually all of the benefits of a P3, but it adds something very
important, namely the capacity of the partners to innovate – to explore new
opportunities for research, and system or technology transformation – to learn
and grow, and to develop an enhanced reputation for excellence that leads to
further opportunities.
CONCLUSION
In the Canadian healthcare system, the public and private sectors have been
coming increasingly together in recent years. The private sector is participating
ever more broadly as the role of healthcare providers expands outside of
hospitals and across the continuum of care. As well, the influence of business
theory and practice is found throughout the governance and management of
institutional delivery of care. This convergence of purpose and thinking presents
valuable opportunities for partnerships and alliances.
Public private partnerships have the potential to contribute much to the
development of infrastructure and other capacity in the Canadian healthcare
systems. But in pushing the boundaries of partnership structures, strategic
alliances have the capability to bring in further resources and expertise to
achieve certain public policy objectives. They represent a special type of
partnership in which both the government and the private sector partners can
have an alignment of strategic objectives and pursue their objectives more
successfully by working together rather than apart.
A strategic alliance shares many of the features of a public private partnership,
but the essential difference is in the coming together of strategic priorities
between the government and the corporation. A public private partnership
may be a very effective way of achieving an overall public policy goal, but this
is often achieved despite the fact that the private sector party’s goals are more
commercial than public policy related. Strategic alliances are different than
public private partnerships precisely because they represent an opportunity for
business and government to come together in a joint undertaking where both
have strategic objectives that do in fact align. It is this alignment that creates the
exceptionally strong capability of the partners working together – both want
substantially the same things because each has found a way to integrate its
individual goals with those of the alliance.
However, strategic partners still have their differences. The private sector has
commercial goals that it cannot ignore. This leaves government vulnerable to
being unable to achieve one of its most important goals, namely responsibility
and accountability. The bicameral governance structure provides a mechanism
for drawing together both the public and private sector partners in a way that
enables both to achieve common strategic objectives while ensuring they meet
their obligations to their stakeholders.
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Appendix A: Public Private Partnerships in the Healthcare Sector Across Canada
# Project Title Province/Territory Current Stage Model1 Abbotsford Regional Hospital & Cancer Centre British Columbia Operational Design-Build-Finance-Maintain-Operate
2 BC Cancer Agency Centre for the North British Columbia Operational Design-Build-Finance-Maintain
3 BC Children’s and BC Women’s Redevelopment Project British Columbia Under Construction Design-Build-Finance-Maintain
4 Bluewater Health Sarnia Ontario Operational Build-Finance
5 Brampton Civic Hospital Ontario Operational Design-Build-Finance-Operate
6 Bridgepoint Health Ontario Operational Design-Build-Finance-Maintain
7 Cambridge Memorial Hospital Capital Redevelopment Ontario Under Construction Build-Finance
8 Casey House Facility Replacement Project Ontario Under Construction Build-Finance
9 Centracare Psychiatric Care Facility New Brunswick Operational Design-Build-Finance-Maintain
10 Centre for Addiction and Mental Health Phase 1C Redevelopment Project Ontario RFQ Design-Build-Finance-Maintain
11 Centre for Addiction and Mental Health (CAMH) Ontario Operational Design-Build-Finance-Maintain
12 CHU Sainte-Justine Quebec Under Construction Design-Build-Finance
13 Credit Valley Hospital Phase II Redevelopment Ontario Operational Build-Finance
14 Credit Valley Hospital Priority Areas Redevelopment Phase III Ontario Under Construction Build-Finance
15 Devonshire Care Centre Alberta Operational Design-Build-Finance-Operate
16 Erinoak Kids Centre for Treatment and Development Ontario Financial Close Design-Build-Finance
17 Fort St. John Hospital & Residential Care Project British Columbia Operational Design-Build-Finance-Maintain
18 Gordon & Leslie Diamond Health Care Centre British Columbia Operational Design-Build-Finance-Maintain
19 Halton Healthcare Services (Oakville Hospital) Ontario Under Construction Design-Build-Finance-Maintain
20 Hamilton Health Sciences (Hamilton General Hospital) Ontario Operational Build-Finance
21 Hamilton Health Sciences (Juravinski Hospital and Cancer Centre) Ontario Operational Build-Finance
22 Hamilton Health Sciences McMaster Children’s Hospital Ontario Under Construction Design-Build-Finance
23 Haut-Richelieu-Rouville (Montérégie) Long-Term Care Centre (CHSLD) Quebec Under Construction Design-Build-Finance-Maintain-Operate
24 Haute-Yamaska (Montérégie) Long-Term Care Centre (CHSLD) Quebec Under Construction Design-Build-Finance-Maintain-Operate
25 Hawkesbury and District General Hospital Redevelopment Ontario Under Construction Build-Finance
26 Humber River Regional Hospital Ontario Under Construction Design-Build-Finance-Maintain
27 Interior Heart and Surgical Centre Project British Columbia Under Construction Design-Build-Finance-Maintain
28 Jardins-Roussillon (Montérégie) Long-Term Care Centre (CHSLD) Quebec Operational Design-Build-Finance-Maintain-Operate
29 Jim Pattison Outpatient Care and Surgery Centre British Columbia Operational Design-Build-Finance-Maintain
30 Joseph Brant Memorial Hospital Redevelopment Phase 1 Ontario Financial Close Design-Build-Finance
31 Kelowna and Vernon Hospitals Project British Columbia Operational Design-Build-Finance-Maintain
32 Kingston General Hospital & Cancer Centre of Southeastern Ontario Ontario Operational Build-Finance
33 Lakeridge Health Ontario Operational Build-Finance
34 Laval Long-Term Care Centre (CHSLD) Quebec Operational Design-Build-Finance-Maintain-Operate
35 London Health Sciences Centre (M2P2) Ontario Operational Build-Finance
36 London Health Sciences Centre (M2P3) Ontario Under Construction Build-Finance
37 MacKenzie Vaughan Hospital Ontario Shortlist Design-Build-Finance-Maintain
38 Markham Stouffville Hospital Ontario Operational Build-Finance
39 McGill University Health Centre (MUHC) Glen Campus Quebec Construction Complete Design-Build-Finance-Maintain
40 Milton District Hospital Redevelopment Ontario Financial Close Design-Build-Finance-Maintain
41 Montfort Hospital Ontario Operational Build-Finance
42 Montreal University Hospital Center (CHUM) Quebec Under Construction Design-Build-Finance-Maintain
43 Montreal University Hospital Research Centre (CRCHUM) Quebec Operational Design-Build-Finance-Maintain
44 Niagara Health System (St. Catharines Hospital) Ontario Operational Design-Build-Finance-Maintain
45 North Bay Regional Health Centre Ontario Operational Build-Finance-Maintain
46 North Island Hospitals Project British Columbia Under Construction Design-Build-Finance-Maintain
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The Role of the Private Sector in Canadian Healthcare: Accountability, Strategic Alliances, and Governance
# Project Title Province/Territory Current Stage Model47 Ottawa Paramedic Service Headquarters Ontario Operational Design-Build-Finance-Maintain
48 Ottawa Regional Cancer Centre (Ottawa Hospital) Ontario Operational Build-Finance
49 Ottawa Regional Cancer Centre (Queensway Carleton Hospital) Ontario Operational Build-Finance
50 Peel Memorial Centre for Integrated Health and Wellness Ontario Under Construction Design-Build-Finance-Maintain
51 Penticton Regional Hospital Patient Care Tower British Columbia RFP Design-Build-Finance-Maintain
52 Phase 1 Patient Tower Project at Etobicoke General Hospital Ontario Shortlist Design-Build-Finance-Maintain
53 Providence Care Hospital Ontario Under Construction Design-Build-Finance-Maintain
54 Public Health Laboratory at MaRS Center Phase 2 Ontario Under Construction Build-Finance
55 Quinte Health Care Belleville Site Ontario Operational Build-Finance
56 Restigouche Hospital Centre New Brunswick Under Construction Design-Build-Finance-Maintain
57 Rouge Valley Health System (Ajax-Pickering Hospital) Ontario Operational Build-Finance
58 Royal Jubilee Hospital Patient Care Centre British Columbia Operational Design-Build-Finance-Maintain
59 Royal Ottawa Mental Health Centre Ontario Operational Design-Build-Finance-Maintain-Operate
60 Royal Victoria Hospital (Barrie) Ontario Operational Build-Finance
61 Runnymede Healthcare Centre Ontario Operational Build-Finance
62 Saint-Lambert Long-Term Care Facility (CHSLD) Quebec Operational Design-Build-Finance-Maintain-Operate
63 Saskatchewan Hospital North Battleford - Integrated Correctional Facility Saskatchewan RFP Design-Build-Finance-Maintain
64 Sault Area Hospital Ontario Operational Build-Finance-Maintain
65 St. Joseph’s Health Care London (M2P1) Ontario Operational Build-Finance
66 St. Joseph’s Health Care London (M2P2) Ontario Operational Build-Finance
67 St. Joseph’s Health Care London (M2P3) Ontario Under Construction Build-Finance
68 St. Joseph’s Healthcare Hamilton - West 5th Campus Ontario Operational Design-Build-Finance-Maintain
69 St. Joseph’s Regional Mental Health Care (London and St. Thomas) Ontario Under Construction Design-Build-Finance-Maintain
70 St. Michael’s Hospital Redevelopment Project Ontario Financial Close Design-Build-Finance
71 St. Thomas Elgin General Hospital Ontario Shortlist Build-Finance
72 Stanton Territorial Hospital Renewal Project Northwest Territories Shortlist Design-Build-Finance-Maintain
73 Sudbury Regional Hospital Ontario Operational Build-Finance
74 Sunnybrook Health Sciences Centre Ontario Operational Build-Finance
75 Surrey Memorial Hospital Redevelopment and Expansion: Emergency Department and Critical Care Tower
British Columbia Operational Design-Build-Finance-Maintain
76 Swift Current Long Term Care Centre Project Saskatchewan Under Construction Design-Build-Finance-Maintain
77 Toronto Rehabilitation Institute (University Centre site) Ontario Operational Build-Finance
78 Trillium Health Centre Ontario Operational Build-Finance
79 University of Ottawa Heart Institute: Cardiac Life Support Services Redevelopment Project
Ontario Under Construction Build-Finance
80 VIHA Residential Care & Assisted Living Capacity Initiative British Columbia Operational Design-Build-Finance-Operate
81 Waypoint Centre for Mental Health Care Ontario Operational Design-Build-Finance-Maintain
82 Windsor Regional Hospital (Western Site) Ontario Operational Build-Finance
83 Women’s College Hospital Ontario Under Construction Design-Build-Finance-Maintain
84 Woodstock General Hospital Ontario Operational Build-Finance-Maintain
Source: The Canadian Council for Public and Private Partnerships (Canadian PPP Project Database, 2015), http://projects.pppcouncil.ca/ccppp/src/public/search-project?pageid=3d067bedfe2f4677470dd6ccf64d05ed.
MoniesonHealth.com : : Conference Twitter Hash Tag: #QHPCC
The Role of the Private Sector in Canadian Healthcare: Accountability, Strategic Alliances, and Governance
References
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———. 2015b. “If Canada Had a Healthcare Strategy, What Form Could It Take?” In Toward a Healthcare Strategy for Canadians, edited by A. S. Carson, J. Dixon, and K. R. Nossal, 255–76. Montreal and Kingston: McGill-Queen’s University Press.
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A. Scott Carson
Dr. A. Scott Carson is a Professor of Strategy and Director of The Monieson Centre for Business Research in Healthcare at Queen’s School
of Business, Queen’s University, Kingston, Ontario. Formerly at Queen’s School of Business, he was Director of the Queen’s MBA program.
Dr. Carson’s career has combined business and government service with academe. His past positions include Dean of the School of
Business and Economics at Wilfrid Laurier University; Chief Executive Officer of the Ontario Government’s Privatization Secretariat; and
Vice-President and Head of Corporate Finance for CIBC in Toronto, responsible for project and structured finance and financial advisory.
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